Find out how your rental income could still be covered if your tenants don’t pay, with rent guarantee insurance.
Rent guarantee is a part of landlord insurance that you often have to pay for as an optional extra.
It covers the money you’d usually get from a property you rent out if your tenants don’t pay.
Rent guarantee cover is usually capped, for example up to £2,500 a month, and is only paid for a limited time set out in the policy, usually of between six and 12 months.
Terms vary from one policy to another, but you can usually claim when tenants have fallen into a month’s worth of arrears, you’ve tried mediation and want to start the process of evicting your tenants for non-payment.
Your insurance will pay the unpaid rent until you've regained vacant possession of your property, up to the time limits of your policy.
As well as covering you for lost rent, some policies will cover you for legal legal costs incurred in the eviction process or if you are involved in any other disputes with your tenants.
Some policies will also pay out a proportion of your rental income for a few months after you’ve evicted tenants and are looking for new ones.
Exclusions will vary between policies but rent guarantee insurance usually won’t cover:
No, it’s up to you whether you decide to take it out.
But it can be a real safety net, especially if you rely on your rental income to cover the cost of the mortgage on the property you’re renting out.
For a policy to be valid, your tenants will need to have passed the necessary reference process.
You’ll need them to:
If tenants fail the referencing requirements, they must have a guarantor who has passed the process for a policy to be valid.
Some policies have no excess while for others it could be as much as a month’s rent.
Policies will have a cap on how much you can claim and for how long.
In general, you can claim a maximum £2,500 per month (even if what you charge is more than that) for a timescale of between six to 12 months, or until you regain possession of your property (whichever is sooner).
A policy covers only one property. If you want cover for more than one property you’ll need to take out a separate policy for each.
No, this type of insurance is only designed to cover you if your tenants stop paying rent but remain in the property.
It’s there to help you evict the tenant and cover the unpaid rent in the process.
If your tenant is already in arrears, you can’t take out a new rent guarantee insurance policy.
The policy is based on the property, so will cover new tenants as long as they have passed all the referencing checks.